27 December 2012 03:24 [Source: ICIS news]
By Hazel Goh
SINGAPORE (ICIS)--Asia’s liquid epoxy resins (LER) prices will likely to stay flat in the first quarter of 2013 despite prices having bottomed out, because of expected continuous weak market sentiment and low demand, market players said.
Some market players are expecting a repeat of the trend in 2011 and 2012, of firm LER prices in the first quarter, to occur in 2013.
However, most market players are not pinning their hopes too high on the back of continuous weak demand seen in the second half of 2012.
The trades for LER from both the coatings and electronic sectors have largely been on a need-to basis in 2012 and demand became exceptionally sluggish in the fourth quarter of 2012.
“Epoxy resins prices have been on the downtrend since the second quarter of 2012. Prices have bottomed out,” a producer said in mid-December.
The average iso-tank LER price was assessed as $2,525/tonne (€1,919/tonne) FOB (free on board) northeast (NE) Asia for the week ended 18 December, according to ICIS pricing data.
In 2012, iso-tank LER prices peaked at $2,800/tonne FOB Asia for the week ended 13 March, before falling by $215/tonne, or by 8%, at the end of the second quarter of 2012 to $2,585/tonne FOB NE Asia.
The average iso-tank LER prices were largely flat for the third and fourth quarters of 2012.
Looking forward into the first quarter of 2013, producers expect to receive more orders in January when typically more buyers will return to replenish their inventories after keeping them lean for the year-end accounting.
Buyers are also expected to be stocking up some inventories prior to the Lunar New Year holiday.
However, the overall buying activity is expected to be lukewarm in the first quarter of 2013 because of weak demand from the US and Europe on the back of weak economic situation.
Furthermore, weak demand for end-user products and slow demand from Asia because of the Lunar New Year holiday in February is expected to dampen buying activity.
A producer said US and European domestic producers, such as Dow and Momentive, are considering lowering their domestic LER prices.
“In my point of view, LER prices [are likely to] remain stable until mid-January,” the producer said.
Uncertainties in the upstream phenol, propylene and benzene prices, the feedstock bisphenol A (BPA) and epichlorohydrin (ECH) prices and the macroeconomic situation in China, the US and Europe, make it difficult to look too far ahead, the same producer added.
Some producers are hoping that the positive market signs for epoxy resins demand, seen in the recent firming of upstream phenol and BPA prices amid strong further upstream benzene prices, will bring about better buying sentiment for epoxy resins.
The supply overhang situation in 2012 is likely to continue into 2013, making it a challenge for LER price to rebound, market players said.
According to some market players, the global economy in the first half of 2013 is uncertain but they are more positive about the second half of 2013 when the impact of the policies, to be introduced by China and the US to improve the economic situation, will hopefully influence sentiment and improve buyers’ confidence in the market.
Market players are closely observing the upstream prices and the global economy in anticipation of signs of increase in demand for end-user products and hence, higher demand for epoxy resins.
($1 = €0.76)
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections